Mutual Funds
No-load mutual funds may have lower expense ratios because:
To be classified as a no-load fund, 12b-1 fees cannot exceed 0.25% (25 basis points). Funds with higher 12b-1 fees must be classified as load funds. No-load funds can still charge 12b-1 fees, just not more than 25 bps. S
Complete Analysis & Legal Rationale
To be classified as a no-load fund, 12b-1 fees cannot exceed 0.25% (25 basis points). Funds with higher 12b-1 fees must be classified as load funds. No-load funds can still charge 12b-1 fees, just not more than 25 bps. Sales charges are not part of expense ratios.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing concept in the explanation.
Matches the verified teaching point in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.